Precalculus (10th Edition)

Published by Pearson
ISBN 10: 0-32197-907-9
ISBN 13: 978-0-32197-907-0

Chapter 5 - Exponential and Logarithmic Functions - 5.7 Financial Models - 5.7 Assess Your Understanding - Page 323: 73

Answer

Compound interest is interest added to the principal of a deposit or loan so that the added interest will also earn interest from that point.

Work Step by Step

Continuous compounding can be imagined as making the compounding period infinitely small so that at every moment, the principal is compounding and the added interest will be compounded from the next moment on.
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